Banking analysts had expected the big four banks would follow suit and deliver rate hikes, but admitted out-of-cycle mortgage rate rises during a royal commission would be unpalatable.

The ANZ rate cut signals a move in the other direction, with CBA, NAB and Westpac now tipped to also tweak their rates to the benefit of lower-risk borrowers.

The new ANZ rate will not apply to existing customers, and will only be available to owner-occupiers on principal-and-interest loans with a loan-to-value ratio of less than 80 per cent.

The cut comes as the mortgage market is reshaped by ongoing regulatory pressure on investors and interest-only borrowers from the Australian Prudential Regulation Authority (APRA), sharpening competition between banks for low-risk customers.

“[ANZ] is making an aggressive play for the borrowers who are the better risks and who won’t necessarily draw the ire of APRA.”

The big four banks typically move rates as a herd, according to Mr Zigomanis, with CBA, Westpac and NAB likely to also cut rates for lower-risk customers.

The ANZ cut, and the potential for more to follow from other lenders, presents as additional turbulence for the mortgage market during a time when the Reserve Bank remains firmly on the sidelines.

The central bank hasn’t moved the official cash rate from its record low of 1.5 per cent since setting it in August, 2016 and is widely expected to leave it untouched again at its August meeting on Tuesday.

During the two years without a move from the Reserve Bank, owner-occupiers not on interest-only loans have seen an average fall of 14 basis points to their mortgage rates to 4.5 per cent, according to RateCity research, while investors paying interest-only loans have seen their rates rise by 35 basis points to 5.05 per cent.

“APRA has been furiously trying to inject more stability into banks’ loan books through caps on investor growth and interest-only lending,” RateCity director of research Sally Tindall said.

“As a result, we’ve seen banks reward borrowers living in their homes and paying down their debt with cheaper home loans, while investors and customers paying interest-only have had to withstand sizeable hikes.”